Cyril Ramaphosa was selected by the ANC to become a major beneficiary in empowerment deals. He was one of a few. These deals where aimed at creating wealth outside of the ANC formal structures. The reason was to firstly entrust selected individuals to gain access to not only substantial wealth but also to ensure that such beneficiaries would donate substantial moneys to the ANC .
The ANC aimed to fund it self via selected and well positioned cardes placed within the private sector.
This was done firstly to create a funding loophole which could not be done within the ANC as the capitals raised were from within its own alliance. Secondly it ensured that the ANC would not need to rely on other companies to raise funds which could have become a risk if the private sector colluded against the ANC. Thirdly it would provide a mechanism for broad based ownership on the JSE and link private sector companies to the ANC
For this reason Ramaphosa resigned in 1996 as Secretary General of the ANC . At the time it was stated that he fell out of relations with Nelson Mandela for not being recognised as the successor when Thabo Mbeki. This was a smoke screen as you will see below
This is how it all went down
In 1996 Ramaphosa took position as Deputy Executive Chairman of New Africa Investments Limited (“Nail”) and resigned from the ANC. NAIL invested R7 million to start up an investment banking company called Pleiade Investment Corporation. Pleiade was in fact a vessel used to raise capital but “publicly it was a financial advisor” and “brokered” an investment deal between SBC communications and MTN. SBC communication simultaneously entered into a joint venture investing R25m into Pleiade Investment corporation which was renamed AMB Capital.
In 1996 AMB capital acted as “advisory” to a R2.7 billion broad based empowerment deal in which the National Empowerment Corporation/Consortium (NEC) took a control in Johnnic Holdings Limited. Not only did AMB capital act as advisory but it also raised capital to the value of R2.1 billion for certain members of the National Empowerment Consortium to acquire a controlling stake in Johnnic Holdings Limited (Mutlichoice, Mnet, Hotels and Casinos).
The members of NEC mostly came from the labour unions, its pension funds and is also where most of the capital were raised (Full funding details was never made public). The R2.1 billion was mostly raised out of Labour Unions pension funds. As part of this acquisition, AMB Capital “put forward” Ramaphosa for the position of Chairman to Johnnic holdings. Considering Ramaphosa’s history with labour unions it can been seen why he was needed within the deal structure.
They were using Labour Union member pension funds in equity deals. Within 1996 (Same year Ramaphosa resigned from the ANC and AMB Capital was created) AMB Capital raised a further R1.3 billion for Ikageng Share scheme, AMB Southern African Investment fund and AMB Holdings (Parent company of AMB capital).
Various deals took place with various investment companies being created and by the end of 1997 the above broad based deals took a stake of 10% of the total listed JSE shares. When considering and acknowledge the Afrikaner took close to 20 years to achieve the same level of ownership on the JSE.
Most of the broad-based deals was structured as preferential shares varying between 3 -8% discount to listed share price values. It also saw many of these companies secure lucrative deals with Government.
Over the next decade all these broad-based deals saw Ramaphosa elected into various Executive and Non-Executive positions on the largest firms listed on the JSE. Thes roles Ramaphosa occupied helped favour these companies with government contracts and helped level their BEE status.